"As Greenspan Chases Inflation, Critics Shout, 'Faster!'
"For weeks, the Fed has broadcast its intention to raise interest rates glacially." The Fed was moving slowly, according to an economist because "... the declining price of oil, economic fundamentals, incl productivity and global competition, will keep inflation in check." The Fed, recognizing that the eco was improving stated it planned to "respond to changes in economic prospects as needed to fulfill i obligation to maintain price stability." Other economists disagree with the Fed's restrained policy "mistake"
Www)nytimes, 7/1/20
The Fed's policy will the quantity of money and the supply of loanable funds.
A) increase; increase
B) increase; decrease
C) decrease; decrease
D) decrease; increase

Question

Quizplus · Accepted Answer

The Fed's intention to raise interest rates will decrease the quantity of money and the supply of loanable funds. This is due to the fact that higher interest rates make borrowing more expensive, leading to a decrease in borrowing and spending, which in turn leads to a decrease in the amount of money in circulation and the supply of loanable funds available for investment.